Obstetric brachial plexus palsy is not uncommon. However, lesions masquerading as obstetric brachial plexus palsy are rare. A child with a cervicothoracic arachnoid cyst masquerading as obstetric brachial plexus palsy is presented, and the relevant literature is reviewed. A girl born by vaginal delivery at full term without any antecedent risk factors for obstetric brachial plexus palsy was noted to have decreased movements of the right upper extremity. After 7 months, there was no improvement. An MRI scan was obtained, which revealed a cervicothoracic spinal extradural arachnoid cyst. During surgery, the cyst was found to communicate with the dura at the axilla of the C-7 nerve root. The cyst was excised in toto. Six months later, there was improvement in the infant's neurological status. This case illustrates that spinal arachnoid cysts should be entertained in the differential diagnosis when a child presents with obstetric brachial plexus palsy without known antecedent risk factors for obstetric palsy.